Finance place an important role in business. It uses accounting data to make projections in the future. What are the basic issues addressed by the study of finance?
- Capital Budgeting – These are the decisions that is related to which long term investments and projects should be attempted.
- Capital Structure – These are decision related to how long term investments or projects should be financed. How much long term debt should a company take on?
- Working Capital Decisions – These are decision related to how cash flows from day-to-day operations should be managed.
Other decisions involving Finance:
- Decisions involve an element of time and uncertainty; financial tools help adjust for time and risk.
- Decisions taken in business should be financially viable, financial tools help determine the financial viability of decisions.